Assignment: Bruggs & Strutton
The break-even point
The Bruggs & Strutton Company manufactures an engine for carpet cleaners called the "Snooper." Cost and revenue data for the "Snooper" are given below, based on sales of 40,000 units.
Sales $1,600,000
Less: Cost of goods sold 1,120,000
Gross margin $ 480,000
Less: Operating expenses 100,000
Operating income before taxes $ 380,000
Cost of goods sold consists of $800,000 of variable costs and $320,000 of fixed costs. Operating expenses consist of $40,000 of variable costs and $60,000 of fixed costs.
Required:
A. Calculate the break-even point in units and sales dollars.
B. Calculate the safety margin.
C. Bruggs & Strutton received an order for 6,000 units at a price of $25.00. There will be no increase in fixed costs, but variable costs will be reduced by $0.54 per unit because of cheaper packaging. Determine the projected increase or decrease in profit from the order.
D. Bruggs also received an order for 2,500 units at $29 per unit. If packaging costs will not be reduced on this order and only one order ("C" or "D") can be accepted, which order is more attractive?
Format your assignment according to the give formatting requirements:
a. The answer must be double spaced, typed, using Times New Roman font (size 12), with one-inch margins on all sides.
b. The response also includes a cover page containing the title of the assignment, the course title, the student's name, and the date. The cover page is not included in the required page length.
c. Also include a reference page. The references and Citations should follow APA format. The reference page is not included in the required page length.